Question

MULTIPLE CHOICE (50 Marks – 1 Mark each) 1. Macroeconomics seeks to understand a. economic growth, inflation and business cycles. b. product demand, product cost and profit maximization, c. economic growth, the banking sector and individual markets. d. industry sales, marketing strategies and corporate growth. e. the effects of government spending, taxation and corporate growth. A country's real Gross Domestic Product (GDP) measures the a. dollar income earned by the nation's producing sector. b. market value of final goods and services produced by the domestic economy, measured in base year (constant) dollars. c. level of national income at its potential. d. market value of all final goods and services produced in an economy, including imports, measured in base year (constant) dollars. e. income produced by Canadians regardless of where the income was generated, measured in base year (constant) dollars. 3. Which of the following represents consumption spending in the national accounts? a. the construction of a new home in Inglewood by the Smith family. b. the complete renovation of a home in Calgary. c. the purchase of a beer at the Den. d. the purchase of a used car through Kijiji. e. the price of finished inventory not yet sold to households but will be sold in the future. 4. Gross Domestic Product (GDP) does not measure? a. the value of mowing your own lawn. b. household expenditures on durable goods with borrowed money. c. the value of finished goods in inventory. d. the purchase of a new desk by the Alberta Government. e. both "a" and "d".

Answer 1

1. Option A

Explanation: Macroeconomics deals with economic issues at the aggregate level.

2. Option B

Explanation: Real GDP is the measure of all goods and services produced in an economy in a given year in an economy measures in constant dollars.

3. Option C

Explanation: Purchase of a finished good for consumption comes under consumption spending.

4. Option A

Explanation: There is no market price for mowing one's own lawn.